The motion picture academy says it will build a grassy outdoor cinema in Hollywood.

The Academy of Motion Picture Arts and Sciences will build an amphitheater and event space in Hollywood on a parcel of land that had been the planned site for a movie museum.

The 17,000-square-foot outdoor space is designed to function as a venue for showing classic films and is expected to open in May, according to academy President Tom Sherak.

"It seems like the right thing for both Los Angeles and the academy," Sherak said. "Anyone can set up an outdoor theater but nobody can show what we can show -- either from our archives or from our members. If it works and it's a safe place to go, that's a good thing for L.A."

The organization behind the Oscars purchased the 3.5-acre lot near the intersection of Vine Street and Fountain Avenue in 2005 for $50 million, with the intention of building a world-class movie museum on the lot.

In October, however, the academy announced a partnership with the Los Angeles County Museum of Art on the project, and the movie museum is now set to be housed in the former May Co. department store on Wilshire Boulevard at Fairfax Avenue. The academy will lease the 1939 building from LACMA.

Rather then sell off the land in Hollywood, which sits next to the academy's Pickford Center for Motion Picture Study, the academy opted to open the family-friendly outdoor theater, Sherak said. The location once housed a Big Lots store, a post-production facility and a 1927 bow-truss building that belonged to the Golden Bridge Yoga studio.

The amphitheater will be constructed as a raised grassy area and is expected to seat approximately 300 people. It's expected to have a casual feel with audiences bringing their own blankets or chairs to the screenings. Adjacent to the theater will be a 10,000-square-foot patio designed for special events.

The existing structures will remain on the site. The former Big Lots building will be used for storage, while the two buildings used by the Post Group will be retrofitted to store the academy's artifacts that eventually may reside in the museum.

The property will be landscaped to improve its aesthetics.

"We will have two rows of palm trees called Palm Walk behind the amphitheater to give it a closed-in feel, and there will be lovely plantings all around the site," said museum project administrator Heather Cochran.

Demolition began this week and should be completed by February. The academy hasn't given a name to the venture or a price structure for admission to the films that will screen at the amphitheater, but Sherak doesn't expect the facility to be a big moneymaker for the institution.

"This is not a profit center," he said. "If it ran at a loss, I'd still want to do it. I'm not looking to make money on this one. I'm looking to be part of a big community."

Sherak wouldn't specify which movies would be screened, though he promised that they would be films "that have stood the test of time."

It remains unclear how much demand there is to see older films in a neighborhood that already houses the American Cinematheque's Egyptian Theatre and the Hollywood Forever Cemetery, which has established a cottage industry over the last decade showing classic movies on its grounds during the summer months.

"We're not looking to compete with anybody," Sherak said. "This is about community. This is about the history and heritage of the academy."

Still, the project could prove temporary. Sherak said the academy wanted to keep the land in its possession in case it was unable to raise the roughly $200 million needed to open the museum at the May Co. site. If it fails to meet its fundraising goals, the academy could again consider the Hollywood property as a location for the museum.

Also, Sherak said the organization wanted to retain the property until its value returned to its 2005 level or higher. If the academy put it on the market now, it would probably sell at a loss.

"We don't need to sell it," Sherak said. "We want it to conform with the neighborhood and we are fixing it up now."